Mercedes-benz Goes Hollywood

March 19, 1995|By Fara Warner, Wall Street Journal.

Mercedes-Benz of North America is going Hollywood and high-tech.

The company is looking beyond its advertising agency, Lowe & Partners-SMS, for marketing help, as it aims for a younger audience for its cars and prepares to enter the competitive sport-utility-vehicle market.

The Daimler-Benz unit has hired the interactive-media firm Neographics Inc. to start promoting a new "all-activity vehicle" and is in talks with talent agency International Creative Management to tap its entertainment marketing expertise.

Like most luxury-car makers, Mercedes realizes that the traditional 30-second television commercial and magazine ad aren't enough to drive buyers into the showroom to shell out more than $30,000. "The real question is learning how we can get beyond the traditional advertising venues to rise above the clutter," said Andrew C. Goldberg, Mercedes's general manager of integrated communications.

Mercedes needs as much marketing firepower as it can muster, as it battles strong competitors such as BMW and as the luxury market continues to soften. Though sales have been robust for Mercedes, up almost 18 percent to about 73,000 vehicles in 1994, the luxury market isn't expected to grow in the coming years.

In addition, Mercedes's new luxury sport-utility vehicle may face competition from everyone from Cadillac to Lexus, as most of the luxury makers talk about introducing utilities.

Though that category is considered "hot," forecasters at J.D. Power & Associates aren't predicting major growth. "Our big question is whether there will be room for all of these sport-utilities, and a lot of them may be too late to the party," said senior consultant Thad Malesh.

Malesh predicted sport-utility sales will peak at 1.5 million vehicles in 1996 and then slip to 1.4 million or less. Mercedes doesn't plan to introduce its all-activity vehicle until late 1997.

But Mercedes is starting to recast itself, so ultimately more consumers will think of it as a place to buy sport-utility vehicles, as well as a new line of smaller cars called the A-Class that doesn't have a scheduled launch date.

Through a relationship with ICM or another Hollywood partner, the company could expand the number of places that consumers see the Mercedes brand name, as well as reach a younger audience. Goldberg said a Hollywood partner would help Mercedes become involved in full-length movies and videos, probably in a sponsorship role.

He said negotiations with ICM are in the "formative" stages, and the company also has talked to other firms about entertainment opportunities.

Other car manufacturers, including General Motors, have talked with Hollywood talent agencies. "With the changing nature of communications, it makes sense for us to make as broad a sweep as possible for resources," said Phil Guarascio, vice president and general manager of marketing and advertising at GM.

Guarascio used ICM's expertise to reach Digital Domain, which helped create special effects for the movie "True Lies." Digital Domain, which has helped created Chevrolet ads, is now working on "broader" marketing programs for GM, he said.

Mercedes isn't waiting for a deal with Hollywood, however, to embark on new marketing ventures that don't include Lowe. Mercedes has gathered an estimated 6,000 names of consumers interested in the new sport-utility vehicle from an interactive kiosk set up at auto shows across the country.

With several million people attending auto shows every year, Mercedes can start building a database of interested customers long before it unveils the sport-utility vehicle in TV ads.

The interactive program, created by Neographics in New York, attempts to sell the attributes of the vehicle without consumers seeing it. "The furthest we can go is showing a silhouette," said Jim Heard, Neographics' managing director. "What we had to do is get people involved and get a sense of what would be a good marketing message."